USD/CAD trades with modest gains, recovers further from multi-week lows set on Monday

• A follow-through pickup in the US bond yields extends some support to the USD.
• The ongoing bullish run in Oil prices underpin Loonie and might cap strong gains.

The USD/CAD pair traded with a mild positive bias through the early European session on Tuesday, albeit lacked any strong bullish conviction and remained well below the 1.3200 handle.
 
The pair extended last week’s sharp retracement slide from the vicinity of the 1.3400 handle and lost some additional ground on Monday, sliding farther below mid-1.3100s to its lowest level since late-July. The pair, however, showed some resilience at lower levels and witnessed a late rebound from six-week lows amid a pickup in the US Dollar.

Bullish Oil prices partly offset a modest USD uptick

Against the backdrop of growing optimism over the resumption of the US-China trade talks, a strong follow-through upsurge in the US Treasury bond yields extended some support to the greenback and turned out to be one of the key factors that helped limit any further losses, rather assisted the pair to gain some follow-through traction through the early European session on Tuesday.
 
However, the ongoing bullish run underpinned the commodity-linked currency – Loonie and kept a lid on any meaningful recovery for the pair. Oil prices rose for the fifth consecutive session on Tuesday and climbed further beyond the $58.00/barrel mark to their highest level in almost six weeks on the back of firming expectations that OPEC and other producing countries may agree to extend output cuts to support prices.
 
In absence of any major market-moving economic releases, either from the US or Canada, it will be interesting to see if bulls are able to capitalize on the recovery move or the pair meets with some fresh supply near the 50-day SMA support breakpoint now turned support around the 1.3200 round figure mark.

Technical levels to watch